There are really three different parts to your question that frequently get entangled when we're looking at measuring product market fit. Let’s tease them apart so we can diagnose where the real issue might be:

1. What are the telltale signs of product-market fit?
2. How do you measure fit for net-new value add?
3. Which features should we be taking insight on from our competitors?

Let’s dive in.

1. What are the telltale signs of product-market fit?

The biggest tell-tale sign of market fit is flattening retention curves (people sustainably use your product over time) that generate enough value to sustainably drive new acquisition. There’s tons written about PMF at this point (1, 2, 3) so I’d start there. But, depending on the use-case frequency, type of product, and how early-stage this product is, retention can actually be surprisingly hard to measure. So let’s talk zoom out and talk about the bigger picture first.

It’s useful to contextualize this question by the scope and value-add you think this new add-on service will provide. One of the best frameworks I’ve seen to help you determine what kind of fit you’re working with is Shreyas Doshi’s breakdown of 4 Types of Product-Market Fit.

1. Feature-Problem Fit: a small feature-set that provides compelling value for an important use case
2. Product-Problem Fit: a suite of features that cohesively solve an important problem for a number of distinct customer segments
3. Solution-Segment Fit: a broad offering of related products and services that meet the needs of a few selected segments well
4. Solution-Market Fit: a broad offering that is meaningfully differentiated across a large share of industries or segments that make up the overall market.

These fits differ alone two spectra: how comprehensive the offering is, and how much of a fit it has over a variety of different segments.In companies with a suite of products, different products may have different levels of fit with different segments. Let’s look at Slack for a couple of examples.

• Slack’s video call feature may be very useful for distributed teams that rely on video communication for real-time collaboration. But for smaller teams who are working from the same physical office space, video may be completely irrelevant.
• Similarly, B2B companies that rely heavily on partnerships may get lots of value out of having Slack Connect, which enables them to add representatives from partner orgs into their workspace for real-time communication. Small co-living communities of 10-15 people using Slack for communicating about house management chores likely don’t care about this level of customization.

The bottom line? It’s important first to get clear on what this add-on service is in support of, and for whom. Is this a small feature for an important use case (feature-problem)? Or are we talking about a broad offering that’s meaningfully differentiated across lots of different segments (solution-market)? Little usage of this new add-on service may be a sign of many different things, so let’s now turn to how to measure fit for net-new value adds.

2. How do you measure fit for net-new value adds?

Once you’ve figured out which type of market-fit this new service aligns with, I’d recommend the following:

• Take a step back and reflect on the real goal of this new addition. Is it to drive acquisition? Is it to neutralize competitor demand? Is it to capture a new segment of the market? Is it to provide baseline level of functionality to enable purchase? Is it to improve overall value to the product to drive retention? Is it to increase the use case frequency of your product? If you’re not clear on the real goal in adding the service, it’s going to be hard to know if you’ve got “fit” for achieving that goal.
• Based on that goal, articulate the metrics tree that describes all the the drivers or inputs to reaching that goal. If this add-on service is about increasing new-user adoption of your product, your “fit” metrics are likely to be different than if it’s about improving LTV or ARPU.
• Focus on adoption, retention, and satisfaction metrics that ladder up to your overall metric. These metrics will have different benchmarks depending on how severe the need is and what industry the product is in, but eventually you want to create some internal expectations of what “good” adoption, retention, and satisfaction metrics look like. Your goal should be to set some metrics upfront first so you have expectations before launch, and then to diagnose which of those three metrics is the biggest culprit so that you can design the appropriate next iteration. That said, no iteration will help solve a problem that customers don’t have, which leads me to the next point: you should try to build some conviction about the projected value add to both user and business before you ever ship the feature.
• If you’re measuring a collection of features (like in a subscription), identify which features are over- and under-performing rather than looking at aggregates. Sometimes you need to evaluate a set of features together rather than individually. If this is the case with your add-on service, I’d suggest trying to break down each feature to understand which ones are under-performing (high importance, and low usage), which ones are over-performing (low importance but high-usage), and which ones are stable (proportional usage and importance). This gives you some direction about where to go next.

3. Which features should we be taking insight on from our competitors?

Measuring something you’ve already built is one challenge. Figuring out what (and whether) to build in the first place is another. Because you've mentioned that your competitors already having this add-on service, I wanted to articulate a couple points around this conundrum that are important.

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A. Just because your competitor has it doesn’t mean you should

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It’s a common trap to just copy competitors features to try to stay relevant in the market.

Sometimes copying features works (e.g, Instagram Stories is now well loved but was copied directly from Snapchat Stories), but it’s often because that feature actually resonates with the products’ target segments, or there are other things about the product’s ecosystem that make adoption much more viable. In the case of Instagram, usage of Instagram Stories met a need to lower the stakes of daily posts that persist on people’s grid. It helped people feel less intimidated to post the perfect picture, and more focused on showing their in-the-moment lives. Its success was also aided heavily by the fact that Instagram also had a massive existing network that could use this new feature and instantly start creating more content.

But this is the exception, not the rule. For example, Facebook then went to adopt nearly identical Stories on their own timeline, which have been much less loved. Why? Content creation on Facebook is a feature now relegated to a smaller set of segments, and the need just isn’t there in the same way as it is on Instagram.

Here are a couple other examples where competitors seem very similar, but actually have different feature-sets and/or positioning because their target market segments are slightly different.

   - Slack (for work) v. Discord (for play)

‍    - Squarespace (friendliness) v. Webflow (flexibility)

‍    - Practice (one-stop shop for Coaches) v. Calendly (calendar for any professional)

‍    - Jira (for big teams) v. Linear (for nimble engineering orgs)

When making a decision to build features that competitors have, be sure to understand why you’re doing it, and how it actually fits in with your customer base’s needs and wants. Just because your competitor has a feature on their sales page doesn’t mean it’s well-loved or used by real customers.

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B. When building new value you iterate towards overall product market-fit, you need the right combo of features

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One of my favorite tools to thinking about product value is Slava Akhmechet’s 3 Bucket Framework, which details the difference between gamechangers, showstoppers, and distractors.

- People want to buy your product because of gamechanger features.

- People won’t buy your product if you’re missing showstopper features, but adding it doesn’t generate demand

- People will find distractor features to have no measurable impact on adoption or engagement.

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As you think about the market fit of this new service add-on, you should think through whether it’s the determining factor for why someone buys your product v. another, or if it’s just a must-have requirement because of user- or market- expectations.

For example, Calendly was first-to-play on several third-party integrations, which generated demand of new users who didn’t want to have to manually add Zoom links into events or separately charge through Stripe for invoicing. These were initially gamechangers, but as the market has gotten more competitive, they’re now showstoppers: consumers expect these integrations to even consider the product for adoption.

Think about where your add-on service plays here, as that will inform what your own expectations are of your success metrics.

Putting the pieces together

Let’s summarize.

• Get clear on what this add-on service is trying to accomplish strategically (other than fast-following competitors)
• Clarify which of the four types of product-fit this service best matches.
• Articulate your core success metrics of what good fit looks like from an adoption, retention, and satisfaction standpoint.
• Focus on gamechanger and showstopper features (rather than just copying for the sake of copying).